Class-action changes another component of reform process

After nine attempts in the U.S. Congress, the Class Action Fairness Act was passed in 2005. Although local attorneys say it hasn’t made much difference in Mississippi, the act, known as CAFA, brought changes to this type of litigation all over the country.

“It didn’t change the landscape much in Mississippi,” says Hunter Twiford, managing partner of McGlinchey Stafford’s Jackson office and senior litigator. “Before CAFA, any class action filed in the state had to be filed in Federal Court and it still does.”

He likens CAFA to tort reform on a national basis. The main change is that suits filed in state court can change jurisdiction to federal court.

Amy Pepke with Butler, Snow, O’Mara, Stevens & Cannada’s Memphis office spends 50% to 80% of her time defending class action suits. She practices in Mississippi and Tennessee, has filed class actions in Arkansas and settled a case in California. She says the 2005 act was directed toward getting cases into federal courts rather than state courts. Plaintiffs can no longer choose a state for filing.

“Before CAFA, there was some shopping on plaintiffs side to find a court,” she says. “There were some termed ‘hell holes,’ and CAFA has cut those numbers in half. It’s really directed toward getting cases into federal court. Some state court judges are looking at it and sending them back. Attorneys know judges will look at them closer.”

Rick Bass of the Phelps Dunbar firm in Jackson is involved in defending class action suits and says Mississippi is affected less than most other states. That’s because Mississippi has not ever had a Rule 23 — a provision that allows class action suits to be filed in the state. All of these cases were, and still are, filed in federal court.

“The main purpose was to provide that these cases can be moved from state court to federal court — that’s a big change but not for us,” he says. “We were primarily defending them in federal courts, defending financial institutions and lenders. The cases are most often disputes about a particular type of fee or insurance coverage.”

Jim Craig, also with Phelps Dunbar, says many times lenders or insurance companies prefer class action because it settles the matter in one case rather than a lot of claims.

“CAFA could potentially provide a safety net for businesses if Mississippi adopts Rule 23 now,” he says. “That concern can really be addressed if it’s a true class action. A lot of small businesses might benefit from state court action. Our state citizens benefit from CAFA but not as much as other states.”

He and Bass note that the State Supreme Court appointed a committee to look at adopting a Rule 23 a few years ago but nothing came of it. The Supreme Court or the Legislature can make that change.

“Either could change it but the Supreme Court could do it faster,” Bass says. “It probably makes more sense to do it now.”

Twiford agrees that no legislative action would be required and he doesn’t know of any move by the Supreme Court to make the change happen.

Pepke says CAFA is also helping ensure that named class members are getting fair settlements. “I do think we’re seeing a lot more scrutiny in some jurisdictions,” she says. “It’s perceived there will be less bias in federal court, and class members are being more protected.”

Twiford points out that CAFA also gives judges more determination for attorney fees. “It applies to attorney fees so they don’t become excessive and receive more than class members’ settlements,” he says. “The court has more responsibility and authority. It puts it in the public light and is based on what lawyers actually do.”

He defends class action suits, mostly with financial institutions and lenders, all over the country and finds CAFA good and necessary. He hasn’t seen a lot of class action suits in Mississippi.

“Certainly Katrina has brought some, but it’s difficult to meet the requirements of at least $500,000 in controversy and a minimum of 100 plaintiffs,” he says. ”In the rest of the state, it’s all over the map.”

It’s also significant, Twiford says, that CAFA contains a consumers’ bill of rights that is applicable in Mississippi.

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